The recent upheaval brought by the DeepSeek initiative, alongside shifts in tariff policies, has sent shockwaves through the U.S. stock market, resulting in significant volatility in share prices. Amid what appears to be a precarious market environment, astute retail investors have managed to identify exceptional opportunities for bottom-fishing.

Reports released by multiple Wall Street investment banks reveal a remarkable upsurge in retail investor sentiment last week. Retail investors seem to have transformed into hunters, eagerly diving into the market to seize the opportunity to accumulate stocks at lower prices. The inflow of capital is strikingly selective, with a distinct focus on the technology and semiconductor sectors. These segments have long remained the darlings of the U.S. markets, drawing investor interest for their potential for rapid growth and innovation. During times of heightened market fluctuation, retail investors have targeted these sectors as their new battleground for wealth enhancement.

Data from JPMorgan sheds light on the astonishing scale of this retail capital influx. Retail investors have averaged over $2 billion in daily inflows on two occasions last week, an occurrence that has been recorded just nine times in the last three years. Remarkably, the inflows for Monday and Tuesday soared to unprecedented levels—$3 billion and $4 billion, respectively—setting new benchmarks. Furthermore, the retail sentiment index compiled by JPMorgan surged to an all-time high, surpassing even the frenzy seen during the 2021 meme stock phenomenon. This metric clearly underscores the optimism and strong investment appetite among retail investors toward the current market conditions.

Corroborating these findings, data from Vanda Research highlights the courageous and decisive actions taken by retail investors following the stock market's downturn instigated by DeepSeek's impact. In the span of just one week, retail investors injected approximately $4.25 billion into U.S. stocks and ETFs. Specifically, on Monday alone, inflows reached an impressive $1.85 billion, leading to a five-day average inflow of $1.3 billion—the highest level seen since November 2024. These figures reveal that instead of panic selling during market declines, retail investors are seizing the chance to buy at lower prices, aiming for substantial returns upon market rebounds.

Within the investment landscape of retail investors, the technology sector shines as the most preferred investment area, becoming their hottest target. According to JPMorgan, on Tuesday alone, over 70% of retail inflows surged toward the “Magnificent Seven” tech giants. These seven companies play pivotal roles in the global tech ecosystem, and their activities highly influence market dynamics. Notably, Nvidia has emerged as a favorite among retail investors, reaching a staggering net purchase amount of $1.3 billion, comfortably securing the top spot. Following closely, Tesla garnered an impressive $632 million in net purchases. In reviewing Nvidia's stock movements, it faced its largest single-day decline since March 2020 last Monday. Yet, in stark contrast, retail investors bucked the trend, collectively net buying $562 million of Nvidia's shares that day, marking a record single-day high. From the previous Friday to Tuesday of this week, retail investors have amassed over $1 billion in net purchases of Nvidia’s stock within just a few days. This bold investment behavior illustrates retail investors’ steadfast confidence in Nvidia's future growth.

In terms of investment returns, JPMorgan estimates that retail investors have achieved a return rate of 2.1% this year. While this figure lags slightly behind the S&P 500's 2.7%, it stands out remarkably when compared to the neutral performance of hedge funds. Goldman Sachs has also affirmed that the pressure from retail buying has served as a principal force driving the market's rise during the past two weeks. This indicates that the active investment strategies of retail traders are now making significant impacts on market trends.

However, the dance of market forces remains dramatic. While retail investors fervently buy shares, institutional investors are doing the reverse, opting for significant sell-offs. Reports from JPMorgan indicate that on Tuesday, institutions executed net sales of stocks worth $4 billion. This stark contrast in strategies between retail and institutional investors highlights the diverging perspectives regarding future market trajectories. Institutional players tend to have access to more comprehensive information and sophisticated analytical teams, and their selling actions may signal concerns regarding market risks.

In light of the current market climate, diverse opinions have surfaced. Some analysts argue that today's market mirrors the early 2021 "meme stock" frenzy, suggesting that the influx of retail investors could fuel market bubbles and carry substantial risks. Others point out that technology stocks like Nvidia, buoyed by retail enthusiasm, might already be approaching cyclical peaks, advising investors to adopt a prudent approach and avoid impulsive following.